Key Business Points
- Foreign exchange shortages are significantly impacting the construction of the K43 billion Cresta Lifestyle Hotel in Blantyre, causing delays and potential cost escalation.
- Tobacco sales have declined significantly, with week 11 data showing a 13% decrease in revenue compared to last year, posing a threat to Malawi’s economic stability.
- Diversification of investments is crucial for businesses, as seen in the PSPTF’s strategy to develop the Cresta Lifestyle Hotel, which can help generate returns and mitigate risks, a concept known as "kugawa ndiwo" (diversifying investments) in Chichewa.
The construction of the Cresta Lifestyle Hotel in Blantyre, a $27 million project, has been hindered by foreign exchange shortages, with the project now significantly behind schedule. Minister of Tourism Vera Kamtukule visited the site and was informed that construction has stalled at just 18 percent completion, against an expected 60 percent at this stage. The hotel and conference center, which was scheduled for completion in 2027, faces delays due to the forex crisis affecting imports of critical building materials.
According to Linda Phoya, a member of the project’s executive committee, about 80 percent of the building materials, such as steel, are being imported, hence the delay. George Jim, PSPTF Principal Officer, confirmed the scale of the challenge, saying the project requires billions of Kwacha worth of imported materials sourced at varying exchange rates from different banks. The scarcity of forex will have a multiplier effect on the project, leading to cost escalation.
The revelations caught Kamtukule by surprise, as the developers had apparently not formally approached her ministry for assistance despite the government providing tax incentives for construction materials and operational equipment. The government has procedures in place to assist major tourism infrastructure projects, and Kamtukule encouraged the developers to follow these avenues to access assistance.
In other news, the latest tobacco sales figures underscore the industry’s struggles, with week 11 data showing 113 million kilogrammes sold for $283.6 million at an average price of $2.51 per kg. This represents a significant decline from last year’s performance, posing a threat to Malawi’s economic stability. Tobacco remains Malawi’s primary foreign exchange earner, and the smuggling crisis is a big threat to the country’s economic stability. Industry stakeholders stress that addressing the root causes of slow auction floor sales remains crucial in providing farmers with legitimate alternatives to smuggling, a concept known as "kuletsa msika" (improving the market) in Chichewa.
The Cresta Lifestyle Hotel project features a 300-seater conference centre alongside smaller meeting rooms, and is part of PSPTF’s investment diversification strategy to generate returns for its members. As the project faces delays, it is essential for businesses to diversify their investments, explore alternative sources of funding, and mitigate risks to ensure sustainable growth and development, a principle known as "kufanana na nzeru" (being prudent) in Chichewa. By doing so, businesses can navigate the challenges posed by the forex crisis and tobacco industry struggles, and capitalize on opportunities for growth and investment in Malawi’s economy.
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